Crime

• Oct 5, 2007 2:52 pm US/Central
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  General Mills Involved In Coupon Fraud Lawsuit

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General Mills Involved In Coupon Fraud Lawsuit

Milwaukee, Wis. (AP) ― More than 20 consumer products companies, including PepsiCo Inc., General Mills Inc., and Johnson & Johnson, have sued the nation's largest coupon handler, saying they lost at least $150 million in a coupon fraud scheme.

The companies, which also include Kraft Foods Global Inc., and Kellogg Co., filed a lawsuit against International Outsourcing Services LLC and several of its former officers Thursday in the U.S. District Court of the Eastern District of Wisconsin.

IOS, which does business in Bloomington, Ind., and El Paso, Texas, and several of its officers were charged in the same court in March with defrauding stores and manufacturers of at least $250 million over 10 years by submitting fake coupons to manufacturers for payment.

But the criminal charges against the company were dropped in May after company officials agreed to help prosecute 11 individuals charged, including nine IOS officers and two executives of New Jersey-based Riya Coupon Services.

The scam affected manufacturers nationwide, prosecutors have said, but the case was filed in Milwaukee because the complaint originated there.

The complaint filed Thursday said IOS and the officers submitted fraudulent invoices for coupons that were never redeemed to the companies and received payments for them. IOS acts as a clearinghouse for coupons, receiving them from retailers who seek payment from manufacturers. IOS processes the coupons, gets payments from manufacturers and gives them back to retailers, subtracting fees for its services, the complaint said.

Other plaintiffs include: Bristol-Meyers Squibb Co., Commonwealth Brands Inc., Energizer Battery Inc. and its holding company, Georgia-Pacific Consumer Products LP, Hormel Foods Corp., J.M Smucker Co., Kellogg Co., Kimberly-Clark Global Sales Inc., Land O'Lakes Inc., Lorillard Tobacco Co., McCormick & Company Inc., Nestle USA Inc., Nestle Purina PetCare Co., Procter & Gamble Distributing LLC, S.C. Johnson & Son Inc., and Conopco, Inc., which is affiliated with Unilever.

A message left for chief executive officer Greg Rayburn was not immediately returned Friday.

A letter posted on the company's Web site noted that, as of late March, several of the officers named in the criminal case were no longer with the company. It did not address the civil suit, but said IOS would work with authorities on the criminal case because the charges were dropped.

(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)